Harris Teeter 2008 Annual Report Download - page 57

53
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Discount rates are based on the expected timing and amounts of the expected employer paid benefits and
are established by reference to a representative yield curve of non-callable bonds with a credit rating of Aa and
above with durations similar to the pension liabilities. The weighted average discount rate utilized at the end
of fiscal 2008 of 7.90% represents an increase of 165 basis points over the prior year and significantly reduced
the recorded pension liabilities. A discount rate of 6.25% (consistent with fiscal 2007), would have resulted
in pension liabilities totaling approximately $105 million, or approximately $61 million higher than what was
recorded as of September 28, 2008. Expected long-term return on plan assets is estimated by asset class and
is generally based on historical returns, volatilities and risk premiums. Based upon the plan’s asset allocation,
composite return percentiles are developed upon which the plan’s expected long-term is based.
The SERP is unfunded, with benefit payments being made from the Company’s general assets. Assets of the Pension
Plan are invested in directed trusts. Assets in the directed trusts as of the fiscal year end were invested as follows:
Asset Class 2008 2007
Fixed income .............................................. 30.3% 25.8%
Domestic equities .......................................... 37.1 43.1
International equities ....................................... 7.5 8.4
Tactical asset allocation fund ................................. 11.1 11.6
Alternative Investments – Real Estate .......................... 4.5 4.0
Alternative Investments – Hedge Funds . . . . . . . . . . . . . . . . . . . . . . . . 4.7 4.5
Guaranteed investment contracts .............................. 0.9 0.7
Cash equivalents ........................................... 3.9 1.9
100% 100%
Investments in the pension trust are overseen by the Retirement Plan Committee which is made up of
officers of the Company and directors. The plan assets are split into two segments: the Strategic Allocation
segment over which the Committee retains responsibility for directing and monitoring asset allocation, and the
Tactical Allocation segment which is directed by an advisor selected by the Committee.
The Company has developed an Investment Policy Statement based on the need to satisfy the long-term
liabilities of the Pension Plan. The Company seeks to maximize return with reasonable and prudent levels
of risk. Risk management is accomplished through diversification across asset classes, multiple investment
manager portfolios and both general and portfolio-specific investment guidelines. Asset guidelines for the
Strategic Allocation segment are:
Asset Class Minimum Exposure Target Maximum Exposure
Investment grade fixed income and cash equivalents...... 30.0% 40.0% 50.0%
Domestic equities: ................................. 25.0 40.0 55.0
Large cap value ................................ 3.0 9.0 20.0
Large cap growth ............................... 3.0 9.0 20.0
Large cap core ................................. 3.0 10.0 20.0
Small cap value ................................ 0.0 6.0 12.0
Small cap growth ............................... 0.0 6.0 12.0
International equities: .............................. 5.0 10.0 15.0
International growth............................. 0.0 5.0 10.0
International value .............................. 0.0 5.0 10.0
Alternative Investments: ............................ 0.0 10.0 20.0
Real Estate .................................... 0.0 5.0 10.0
Hedge Funds................................... 0.0 5.0 10.0